Waddell & Reed 1Q earnings fall 1 percent on higher costs

Net income fell to $28.3 million, or 33 cents per share, from $28.7 million, or 35 cents per share, during the same period a year earlier.

Analysts polled by Thomson Financial, on average, forecast earnings of 39 cents per share for the quarter on revenue of $242.4 million.

Total revenue increased to $234.1 million during the first quarter, from $189.5 million during the year-ago period.

Waddell & Reed's operating margin narrowed during the quarter because of higher distribution costs, tied to increased sales in the company's wholesale channel, and rising incentive compensation for the investment management staff.

Underwriting and distribution expenses increased 32 percent to $124.8 million. Compensation and related costs increased 28 percent from the year-ago period to $34.3 million.

Rising general and administrative costs related to growing operations also pressured Waddell & Reed's operating margin and its earnings.